Echelon Glen Co-op., Inc. v. Voorhees Tp.

• Decision Date: 04 August 1994
• Citation: 646 A.2d 498,275 N.J.Super. 441
• Parties: ECHELON GLEN COOPERATIVE, INC. and Bala Properties Group, Inc., Plaintiffs-Respondents, v. VOORHEES TOWNSHIP, Defendant-Appellant.
• Court: New Jersey Superior Court — Appellate Division

Page 441

275 N.J.Super. 441

646 A.2d 498

ECHELON GLEN COOPERATIVE, INC. and Bala Properties Group Inc., Plaintiffs-Respondents, v. VOORHEES TOWNSHIP, Defendant-Appellant.

Superior Court of New Jersey Appellate Division.

Argued April 26, 1994.

Decided Aug. 4, 1994.

V. Richard Ferreri, Laurel Springs, for appellant Voorhees Tp. (Ferreri & Wade, attys.; Mr. Ferreri on the brief).

Keith A. Bonchi, Atlantic City, for appellant Richard Simon, trustee (Goldenberg, Mackler & Sayegh, attys.; Mr. Bonchi on the letter brief).

William F. Saldutti, III, Cherry Hill, for respondent Bala Properties Group, Inc., as receiver for Echelon Glen Co-op., Inc. (Dembo & Saldutti, attys.; Mr. Saldutti on the letter brief).

Sanford E. Chernin, Somerville, for amicus curiae, the Tax Collectors and Treasurers Ass'n of New Jersey, Inc. (Mr. Chernin on the brief).

Before Judges BRODY, STERN and KEEFE.

The opinion of the court was delivered by

STERN, J.A.D.

Pursuant to leave granted, defendant Voorhees Township appeals the Tax Court's order denying its motion to dismiss plaintiff's appeal from the 1991 tax assessment for three of its properties in the Township. ¹ We also granted Richard Simon, purchaser of the tax sale certificates for two of plaintiff's properties, leave to appeal the denial of his motion to intervene in order to pursue dismissal of plaintiff's tax appeal. The Township and Simon contend that the Tax Court may not consider the tax appeal because plaintiff failed to pay the taxes due on the property, as required by N.J.S.A. 54:3-27, and that the statutory prerequisite to such an appeal is not satisfied by the sale of certificates which provide revenues in lieu of the taxes. The Township also contends that the Tax Court erred in holding that plaintiff was excused from complying with N.J.S.A. 54:3-27 in filing the appeal without payment of the taxes because it was in receivership and therefore was indigent.

On August 13, 1991, plaintiff filed a complaint with the Tax Court ² appealing the 1991 assessments on Block 150.03, Lot 1, and Block 150.14, Lots 2 and 8, alleging that they were "arbitrary, unreasonable, unequal and discriminatory in comparison with other assessments in [the] taxing district." However, plaintiff made no payments on the assessments. ³

On April 29, 1992, Simon purchased from defendant Township tax sale certificates for Block 150.03, Lot 1, and Block 150.14, Lot 2, for $336,818 and $357,236, respectively. Each certificate bore an interest rate of 18% and was purchased for the amount of the 1991 taxes on the lots plus sewer and utility charges. ⁴ The sales were conducted pursuant to N.J.S.A. 54:5-19 requiring such a sale after April 1 following the fiscal year in which they became in arrears. Neither defendant Township nor plaintiff disputes Simon's contention that the tax sale certificates did not indicate that the 1991 assessment had been appealed by the property owner. No information about the appeal was conveyed incident to the tax sale.

Before the Tax Court, plaintiff estimated that the true value of the properties was approximately $9,000,000, whereas, defendant estimated it to be approximately $16,000,000. It was therefore apparent that the property had been over assessed at $20,400,000. The tax appeal was, in any event, adjourned to permit plaintiff and the Township to reach a settlement after they received "their respective finalized appraisals."

However, on September 14, 1993, defendant Township filed a motion to dismiss the complaint on the ground that N.J.S.A. 54:51A-1(b) required that taxes be paid before the appeal could be filed. The motion was denied.

The Tax Court also denied Simon's motion to intervene. He asserted that if the assessment was reduced and the taxes paid, his interest would be jeopardized and that he was, therefore, entitled to intervene in support of dismissal of the appeal. We granted him leave to appeal after learning that the Township initially decided not to pursue the dismissal.

In a letter opinion filed pursuant to R. 2:5-1(b), the Tax Court held that under Woodlake Heights Homeowners Ass'n, Inc. v. Middletown Tp., 7 N.J.Tax 364, 367 (App.Div.1984), an indigent taxpayer unable to pay its real estate taxes must be allowed to maintain a tax appeal. It ruled that because plaintiff was in receivership, the taxes did not have to be paid for plaintiff to "continue to pursue its appeal." The Tax Court also noted that the 1991 appeal could not be dismissed because "plaintiff's 1991 real estate taxes had been paid by the purchaser of a tax sale certificate." The judge relied on Freehold Office Park v. Freehold Township, 12 N.J.Tax 433 (Tax 1992), in so holding.

I.

We recently rejected the notion that there is a constitutional right to pursue a tax appeal before payment of the taxes:

Plaintiff appeals contending its inability to pay should constitute an exception to the requirements of N.J.S.A. 54:3-27 so plaintiff's due process rights can be protected. Alternatively, it argues the tax court erred in denying it a hearing on the issue of ability to pay. We find the contentions clearly without merit and affirm. See R. 2:11-3(e)(1)(D), (E).

We are bound by the New York, Susequehanna and W.R.R. Co., [44 N.J. 491, 210 A.2d 214 (1965) ] holding. If an exception is to be carved out, as plaintiff argues it must be, it is for the Supreme Court to do so.

Even so, we conclude Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971), does not dictate an exception in this case.

[Jefferson-Halsey Roads Associates, L.P. v. Parsippany-Troy Hills Tp., 13 N.J. Tax 138, 139 (App.Div.1993).]

Significantly, the Supreme Court dismissed the appeal in Jefferson-Halsey Roads Associates "for failure to state a substantial constitutional issue." 135 N.J. 298, 639 A.2d 299 (1994). Hence, if the purchase of a sale certificate is not the equivalent of payment for purposes of the taxpayer's right to pursue an appeal, the tax appeal must be dismissed.

II.

The question before us, therefore, is whether a property owner appealing a property tax assessment directly to the Tax Court is relieved of the obligation imposed by N.J.S.A. 54:3-27 to pay property taxes as a condition of appeal when a tax sale certificate is sold by the municipality to a third party. It is acknowledged that the public sale of certificates by the municipality generates the revenues which it would have otherwise obtained by payment of the taxes. The Township and Simon contend that the payment of taxes is a statutory prerequisite for an appeal and that purchase of a tax sale certificate does not relieve a property owner of that obligation. Simon and the amicus emphasize that the Tax Court's decision will undermine the legislative desire to encourage the purchase of tax sale certificates because a successful appeal may reduce the interest a purchaser earns on the certificate. The parties seem to agree that had the municipality filed a timely motion to dismiss the appeal, the appeal may have been dismissed before the tax certificate was sold. Moreover, if the payment of taxes is a jurisdictional prerequisite to the appeal, the failure of the Township to pursue a dismissal in a timely fashion would be irrelevant.

N.J.S.A. 54:3-27 now provides, in part, that:

A taxpayer who shall file an appeal from an assessment against him shall pay to the collector of the taxing district no less than the total of all taxes and municipal charges due, up to and including the first quarter of the taxes and municipal charges assessed against him for the current tax year in the manner prescribed in R.S. 54:4-66.

The statute applies to both an appeal to a county board of taxation and a direct appeal to the Tax Court. ⁵ Powder Mill I Assocs. v. Hamilton Tp., 190 N.J.Super. 63, 66-70, 461 A.2d 1199 (App.Div. 1983). N.J.S.A. 54:3-21 authorizes appeals to the county board of taxation and, in the case of assessed valuation in excess of $750,000, directly with the Tax Court. The second paragraph of N.J.S.A. 54:3-27 expressly states that the payment of the required taxes pending appeal "shall in nowise prejudice the status of the appeal or the rights of the appellant to prosecute such appeal, before ... the tax court." ⁶ Hence, it is clear that N.J.S.A. 54:3-27 applies to a direct appeal authorized by N.J.S.A. 54:3-21. See also Powder Mill I Assocs. v. Hamilton Tp., supra, 190 N.J.Super. at 66-70, 461 A.2d 1199.

N.J.S.A. 54:3-27 provides "relief to municipalities from the financial hardship resulting from an interruption in the flow of tax revenues" if taxpayers could appeal assessments and delay payments pending appeal. Lecross Assocs. v. City Partners, 168 N.J.Super. 96, 99, 401 A.2d 1099 (App.Div.), certif. denied, 81 N.J. 294, 405 A.2d 837 (1979). Prior to 1975, an appealing taxpayer was required to pay only the amount of taxes for which he or she would be obligated to pay if successful on appeal, thus creating a great financial strain on municipalities. Lecross Assocs. v. City Partners, supra, 168 N.J.Super. at 98, 401 A.2d 1099. The hardship was particularly severe because, pending the appeal, municipalities could not conduct a tax sale for the difference between what the taxpayer had paid and the full assessment. Ibid. The 1975 amendments to N.J.S.A. 54:3-27 were designed to ensure that tax revenues would not be disrupted during assessment appeals. The 1975 Act required payment of 90% of the assessment, while a 1977 amendment required payment of "the first three quarters of the taxes assessed ... for the current tax year." See L.1975, c. 361, L.1977, c. 357, § 1. See also Rt. 88 Office Assoc. v. Brick Tp., 13 N.J. Tax 14, 21 (Tax 1992). As noted, however, the 1991 amendment required payment of the "total of all taxes and municipal charges due, up to and including the first quarter of the taxes and municipal charges assessed ... for the current tax year." L.1991, c. 75, § 30. ⁷

However, the payment under N.J.S.A....